Prime Minister Elisabeth Borne recalled this on Monday 22 May, during the presentation of her action plan to combat global warming to the National Council for Ecological Transition (CNTE): "To achieve our objectives in 2030, we must double the rate of reduction of our greenhouse gas emissions". The road ahead is immense and will require significant investments on the part of the State. But the question of financing was carefully avoided by the head of government.

Yet it is crucial and is dealt with in a report submitted to Elisabeth Borne the same day by the economist Jean Pisani-Ferry. Entitled "The economic impact of climate action", it stresses that the transition to a low-carbon economy will not succeed without helping households and increasing public debt.

"Decarbonisation will call for additional investment" public and private of 66 billion euros per year, says the document whose rapporteur is the inspector general of finances Selma Mahfouz.

[Transition] The mission to assess the macroeconomic impacts of the ecological transition, entrusted to @pisaniferry by the Prime Minister, publishes its synthesis report, accompanied by 11 thematic reports. Key messages👇#Thread 1/17
👉https://t.co/9yqzazQk8q pic.twitter.com/fLq6uegFNp

— France Strategy (@Strategie_Gouv) May 22, 2023

The coming years are described as a "decade of all difficulties" with massive needs to finance new mobility, green industry or building insulation, or to compensate for the collapse of the French forest carbon sink.

For Jean Pisani-Ferry, the State should not hesitate to resort to debt. "There are many bad reasons to go into debt, and the climate is not one of them! When you have to invest massively over a short period, and the return on these investments is expected only beyond this period, this is precisely a reason to resort to public debt," he said in an interview published Monday, May 22 by Le Monde.

Convincing the French that "the burden is equitably distributed"

According to the recommendations of his report, the State's debt to finance the ecological transition should increase "by the order of ten points of GDP in 2030 [or at least 280 billion euros, Editor's note], fifteen points in 2035, twenty-five points in 2040".

A policy in contradiction with the debt reduction objectives announced by the Minister of the Economy Bruno Le Maire, who intends to return the France in the nails of the European stability pact with a deficit of less than 3% of GDP. The Stability Program (PSATB) 2023-2027 transmitted by Bercy to Brussels at the end of April provides for a "return to normalized public accounts once the health and energy crises have passed" with a public deficit that "would return below the threshold of 3% of GDP by 2027".

Another red line of the government crossed by Jean Pisani-Ferry, who had nevertheless headed the team in charge of Emmanuel Macron's program in 2017: tax the richest. "To finance the transition (...), an increase in compulsory levies will probably be necessary. This could notably take the form of an exceptional levy, explicitly temporary and calibrated ex ante according to the anticipated cost of the transition for public finances, which could be based on the financial wealth of the wealthiest households," reads the report submitted to the Prime Minister.

See also Heat waves, droughts, diseases: what would a France at +4 ° C look like?

"By 2050, this levy could represent around €5 billion per year. It's not just a question of resources: it's about convincing the French that the burden is fairly distributed," Pisani-Ferry told Le Monde.

The episode of the Yellow Vests has indeed shown that tax fairness must be at the heart of ecological transition policies. The carbon tax on fuels announced by the government in 2018 placed a disproportionate burden on the working classes and part of the middle classes, who then expressed their discontent on the roundabouts.

"In this context, climate policies are expected to be effective, but also to be fair," the report said.

"We will not raise taxes"

"It is intolerable for people to be told: 'You can no longer use your thermal car', while the wealthiest will simply pay a little more for their weekend in Rome," Pisani-Ferry told Le Monde.

A discourse that delights the left, which has been proposing for several years the creation of a "climate wealth tax", but with which the government is absolutely not in sync. If the Minister of Ecological Transition, Christophe Béchu, said Monday night, in the program Quotidien, that taxing the richest was "not a taboo subject" because "we can not but face the issue of inequalities and a contribution", other prominent members of the government are clearly opposed.

The exceptional tax on wealthy assets advocated by economist Pisani-Ferry to finance the transition "is not a taboo subject," says @ChristopheBechu.

The minister also responds to the activist Camille Etienne who questioned him on the set of #Quotidien ⤵ pic.twitter.com/zbdgKeTuJj

— Daily (@Qofficiel) May 22, 2023

"The ecological transition can be self-financed by the transformations that are necessary to make it possible," government spokesman Olivier Véran said Tuesday morning on France Inter, saying he preferred "something that transforms" rather than "something punitive". "If one tax were enough to transform our country and green the planet, that would be great. But I don't think that's really the issue. Rather, it is to embark on changes in behaviour, consumption patterns and production patterns," he added.

"We need to make those who can contribute more contribute. But I don't think it goes through taxation." @olivierveran responds to the idea of a green wealth tax to finance ecological transition measures. #7930inter pic.twitter.com/9HB7RURSOP

— France Inter (@franceinter) May 23, 2023

The same reflex is expressed by the Minister of the Economy Bruno Le Maire, guest of the RTL morning show: "I do not think this is the solution. We will not increase taxes," he said, explaining that it was necessary to "green our taxation". The question of financing the ecological transition has not finished debating.

🗣️ A new tax to finance the energy transition? @BrunoLeMaire: "I don't think that's the solution. We will not raise taxes. We need to green our taxation."

🔴 Guest to @amandine_begot in #RTLMatin ⤵️ pic.twitter.com/aMqQAPoU6c

— RTL France (@RTLFrance) May 23, 2023

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